Prospect Medical Holdings, Inc. Receives Court Approval of “First Day” Motions

Secures Interim Approval to Access Up to $100 Million in New Money Term Loans to Support Ongoing Business Operations, With $29 Million Immediately Available

Secures Interim Approval to Obtain Up to $90 Million Revolving Credit Facility

Continuing to Provide Uninterrupted, High-Quality and Personalized Care to Patients Across All Regions

Prospect Medical Holdings, Inc. (“Prospect Holdings” or the “Company”) today announced that it has received approvals from the United States Bankruptcy Court for the Northern District of Texas (the “Bankruptcy Court”) for certain “first day” motions related to the Company’s voluntary chapter 11 petitions filed beginning on January 11, 2025.

The Bankruptcy Court granted Prospect Holdings interim approval to access new money term loans in an aggregate principal amount of up to $100 million, of which $29 million is available immediately, in debtor-in-possession financing from JMB Capital Partners Lending, LLC. The Bankruptcy Court also granted Prospect Holdings interim approval to obtain a revolving credit facility provided by eCapital Healthcare Corp. in an aggregate principal amount of up to $90 million. This financing, together with cash generated from the Company’s ongoing operations, is expected to provide sufficient liquidity to support the Company’s financial obligations and day-to-day operations during the court-supervised process.

The Bankruptcy Court has also authorized Prospect Holdings to continue to pay employee wages and benefits without interruption, among other customary relief. A “second day” hearing to approve certain of the Company’s motions on a final basis is scheduled for February 12, 2025, at 1:30 p.m. Central Time. Prospect Holdings also intends to pay vendors in full under normal terms for goods and services provided after the filing date.

“We are pleased to have received prompt Bankruptcy Court approval of these first day motions, which will enable Prospect Holdings to continue operating and serving patients in the normal course,” said Von Crockett, Prospect Holdings’ Chief Executive Officer. “With this Court relief and the support of our lenders, we look forward to moving through this process and ensuring that patients receive the quality and compassionate care they deserve.”

Mr. Crockett continued, “Having now achieved this initial milestone, Prospect Holdings is positioned to continue paying our physicians and employees and delivering a coordinated and personalized care experience for our patients without interruption. We thank our patients, health care partners, vendors and other stakeholders for their continued partnership, as well as our physicians and employees for their hard work and dedication to Prospect Holdings.”

As previously announced, Prospect Holdings is proceeding on a strategic pathway to continue an expedited process to transition its East Coast facilities, realign its organizational focus outside of California and return to fulfilling its original mission of operating community hospitals in California, providing vital care to underserved communities, and promoting patient and physician continuity. Implementing the contemplated restructuring plan will enable the Company to facilitate its organizational realignment as expeditiously as possible, while ensuring continued provision of critical and tailored healthcare.

Prospect Holdings’ hospitals, medical centers, and physicians’ offices remain open throughout the chapter 11 process, and patient care and services are continuing uninterrupted.

Additional Information

Additional information regarding the Bankruptcy Court-supervised sale and restructuring process can be found at www.pmhrestructuring.com. Bankruptcy Court filings and other information related to the proceedings are available on a separate website administrated by the Company’s claims agent, Omni Agent Solutions, Inc. (“Omni”), at https://omniagentsolutions.com/Prospect, by calling Omni toll-free at (888) 550-3239 (or (818) 510-3746 for calls originating outside of the U.S. or Canada), or by sending an email to ProspectInquiries@OmniAgnt.com.

Advisors

Sidley Austin LLP is serving as legal counsel, Houlihan Lokey Capital Inc. is serving as investment banker, and Alvarez & Marsal North America, LLC is serving as financial advisor to Prospect Holdings.

About Prospect Medical Holdings, Inc.

Prospect Medical Holdings, Inc. consists of hospitals and affiliated medical groups working for the benefit of every person who comes to us for care. Our comprehensive networks aim to provide coordinated, personalized care to California, Connecticut, Pennsylvania, and Rhode Island.

Cautionary Statement Concerning Forward-Looking Statements –

This press release contains forward-looking statements. These forward-looking statements include statements regarding the process and potential outcomes and timing of the Company’s chapter 11 proceedings, contemplated financing and the Bankruptcy Court’s approval thereof, the Company’s ability to continue to operate as usual during the chapter 11 proceedings and the Company’s ability to pay for continuing obligations. Words such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “guidance,” “indicate,” “intend,” “may,” “might,” “plan,” “possibly,” “potential,” “predict,” “probably,” “pro forma,” “project,” “seek,” “should,” “target,” or “will,” or the negative or other variations thereof, and similar words or phrases or comparable terminology, are intended to identify forward-looking statements. These forward-looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.

Important risks and uncertainties that could cause the Company’s actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, the Company’s future capital requirements and sources and uses of cash, including funds to satisfy its liquidity needs; the Company’s ability to fund its planned operations and its ability to continue as a going concern; the adverse impact of the chapter 11 proceedings on the Company’s business, financial condition, and results of operations; the Company’s ability to maintain relationships with patients, employees, doctors, health plans and other key payers and other third parties as a result of the chapter 11 proceedings; the effects of the chapter 11 proceedings on the Company and the interests of various constituents; the Company’s ability to obtain court approvals with respect to motions filed or other requests made to the Bankruptcy Court throughout the course of the chapter 11 proceedings; and risks associated with third-party motions in the chapter 11 cases. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update or revise this information unless required by law, and forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release.

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